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Wednesday's news and tips

Created:

26 May 2010

Written by:

ShareCast

■ Stockbroker and investment manager Brewin Dolphin saw profits and funds under management move ahead at the half-way stage.

■ Cable&Wireless Worldwide, the largely UK focused part of the old Cable & Wireless split off in March, posted earnings in-line with forecasts and says market conditions are improving (IC COMMENT).

■ Luxury retailer Burberry revealed a 23 per cent increase in full-year adjusted pre-tax profit as it opened more shops and saw strong growth in raincoats and shoes.

■ Rio Tinto chief executive Tom Albanese upped the pressure on the Australian government over its proposed resources "Super-Tax" as he said it is the "number one sovereign risk" faced by the company anywhere in the World.

■ Pizza delivery company Domino's Pizza expects to make annualised cost savings of £1m or more when it opens its new commissary in Milton Keynes.

■ East End focused housebuilder Telford Homes has grown full-year profit by 11 per cent and reinstated the final dividend after witnessing an improvement in the market over the past six months (IC COMMENT).

■ West End of London property specialist Shaftesbury said visitor numbers to the tourist trap remain healthy and that tenant demand remains good.

■ Bookmaker William Hill is to stop taking business from clients resident in France after laws in the country changed.

■ Engineering software maker Aveva reported a decline in annual profit as a weak global shipping market drove down demand.

■ BP is in deep water with the US Environmental Protection Agency (EPA) over the Gulf of Mexico oil spill just as Lloyd's of London put the insurance cost as high as $600m.

■ Local shop portfolio owner Local Shopping staged a recovery in the latest six months with net asset value rising by over 10 per cent, though the property group remains cautious on the market overall.

■ Capital & Counties Properties, the company spun off from Liberty International, has appointed architects Terry Farrell & Partners to work on a master plan for the Earls Court site in London.

■ Software firm Innovation posted an interim pre-tax loss but said it remains on track to deliver full year results in-line with company expectations.

■ BT is making contingency plans to deal with possible strike action after union leaders rejected a new pay deal for staff employed at the telecoms giant.

■ The share price of oil company Matra Petroleum virtually halved on Wednesday morning as news emerged of a major shareholder reducing its stake.

■ Churchill Mining has raised $23.2m (£16.1m) from a placing of shares at 100p each to bankroll the East Kutai coal project in Indonesia at it moves to the development and production phase.

■ Tough competition in the UK mortgage market saw underlying profits nearly halve last year at building society Nationwide, which predicted another difficult year ahead in a flat housing market.

■ Southwest England-focused transport infrastructure group Sutton Harbour is to sell Air Southwest after a tough year for the airline.

■ Scottish and Southern Energy has been awarded a 25-year contract with Nottingham City Council for the replacement and maintenance of over 40,000 lighting columns and illuminated signs in the city, under the Private Finance Initiative (PFI).

■ Hardy Oil and Gas plunged Wednesday as the India-focused firm temporarily suspended the KGV-D3-W1 exploration well due to "unresolved mechanical issues".

FOR A SUMMARY OF LATEST MOVEMENTS IN EQUITY, COMMODITY AND CURRENCY MARKETS, SEE FT.COM'S MARKETS PAGE

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NEWSPAPER SHARE TIPS (26 MAY 2010):

Full round-up of newspaper share tips (sourced from Sharecast)

PRESS HEADLINES:

BP's attempts to limit the financial damage from the catastrophic oil spill in the Gulf of Mexico suffered a blow yesterday when almost half the syndicates in the Lloyd's of London insurance market launched a legal action against the company.

The syndicates are attempting to block efforts by the oil giant to claim on cover held by the rig operator Transocean. BP, which had no external insurance in place for the accident, is trying to claim up to $700m through a policy held by Transocean, the owner of the Deepwater Horizon rig that BP has blamed for the April 20 blast, the Times reports.

BP's chairman hit back at critics of the company's response to the oil spill in the Gulf of Mexico, insisting that they ought to remember that the group was "big and important" for the US. As BP prepared to today launch latest attempt to halt the flow, Carl-Henric Svanberg told the Financial Times on Tuesday that "everything that can be done is being done" to staunch the spill caused by the April 20 explosion on the Deepwater Horizon rig.

Fears that the eurozone's financial crisis could derail the global economic recovery, along with rising tensions in Korea, sent shares and commodity prices tumbling yesterday. The FTSE 100 index fell by 2.54 per cent, finishing below 5,000 for the first time since October last year, and wiped £33bn from the value of Britain's leading 100 companies. Banking stocks were among the heaviest fallers, with Lloyds Banking Group, Royal Bank of Scotland and Barclays all losing more than 5 per cent. There were similar reverses across Europe, with the Dax 30 in Frankfurt down 2.7 per cent and the CAC 40 in Paris 3.5 per cent, the Times reports.

North Korea on Tuesday severed all ties with South Korea, hitting back at Seoul, which has reduced cross-border trade to punish Pyongyang for sinking a warship in March. Tensions on the peninsula are hitting the currency and stock markets of Asia's fourth-biggest economy, with reports that Kim Jong-il, the North Korean dictator, had put his million-man army at battle stations, the FT reports.

The Telegraph adds that the global credit system is flashing the most serious warning signals in almost a year on triple fears of a Spanish banking crisis, escalating political risk in Asia, and a second leg to the US housing slump. Flight to safety drove yields on 10-year German Bunds to 2.56 per cent, below the levels touched in the depths of the Great Depression. The spreads over peripheral European debt rose sharply again, jumping to 137 basis points for Italy, 157 for Spain and 220 for Ireland. Dollar Libor rates gauging stress within the interbank lending market have jumped to a 10-month high of 0.5363 per cent.

Prudential's efforts to persuade shareholders to back its $35.5bn takeover of AIA, the Asian business of AIG, have been dealt a blow after an influential voting adviser to investors told its clients to vote against the deal. RiskMetrics, the international proxy advisory service, issued a critical assessment of the AIA takeover bid, saying while a deal had "a sensible strategic rationale", the Pru was paying a full price, the FT reports.

Harvey McGrath, chairman of Prudential, has leapt to the defence of the company's $35.5bn (£24.5bn) deal for AIG's Asian business, insisting the takeover will still receive the approval it needs from shareholders next month. Speaking as the company listed its shares in Hong Kong and Singapore, Mr McGrath said: "I'm confident our shareholders see the value this combination presents. The response is constructive... I think the vast majority are very comfortable with the transaction," the Times reports.

Bass ale, once Britain's bestselling beer, has fallen so far out of favour with drinkers that it has been put up for sale for only £10m to £15m. Anheuser-Busch InBev, the world's biggest brewer, whose brands include Budweiser, Stella Artois and Beck's, is understood to be calling time on most of its British ale brands in a sale process that could also see Boddingtons, once dubbed the Cream of Manchester, and Flowers sold off, the Times reports.

Microsoft has moved to shake up its struggling consumer devices division as the company tries to keep up with Apple and Google in the fast-growing smartphone market. The chief of its division focused on mobile phones, videogames and other consumer devices is to retire and will not be replaced. Instead the heads of the two units in charge of games and phones will report directly to chief executive Steve Ballmer. Robbie Bach, a Microsoft veteran, will step down this autumn at the age of 48, the company announced. Mr Bach led the entertainment and devices division since its creation in 2005 and was responsible for the original launch of Xbox in 2001,the Times reports.

Regulation of Britain's financial services industry is to be handed back to the Bank of England under the Financial Reform Bill proposed by the newly formed coalition Government in yesterday's Queen's Speech. Not only will the Bank gain new powers of macroprudential regulation – that is, maintaining financial stability and looking out for new bubbles – but it will also have oversight of microprudential regulation, according to the legislative programme outlined at the opening of the new Parliament, the Independent reports.